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Moser Baer debt recast: Rs 2.65 billion haircut proposed

According to reports, lenders to ailing Moser Baer India Ltd have proposed to scarify about Rs 265 crore of debt, including forgoing part of the interest income, as part of restructuring the company’s debt.

Commercial banks, including Central Bank of India and State Bank of Hyderabad, have credit exposure of Rs 2,000 crore in the Delhi-based company that is present across the solar power, equipment and media sectors.

A senior public sector bank executive involved in the debt restructuring said the company did not fare well due to factors like an abnormal increase in the prices of key raw materials and the inability to pass on the rise to customers, owing to oversupply in 2009-10 and 20010-11.


The higher debt burden, due to a rise in interest rates, and the stretched working capital cycle during the financial crisis also dented the company’s performance, he added. The company was unable to unlock investments in its photovoltaic and entertainment subsidiaries.

Other elements of draft restructuring package include a two-year moratorium on interest payments and capital infusion of Rs 40 crore by promoters.

In February, Moser Baer had, in a statement to the Bombay Stock Exchange, said its board had approved its bankers’ plan to restructure the company’s debt.

After the downturn in 2010-11, the company had recorded a surge in its core optical media business, which led to a significant turnaround and growth opportunities in a few product markets.

Its subsidiary, Moser Baer Photo Voltaic Limited, which manufactures photovoltaic cells and modules, is also headed for corporate debt restructuring.

After its results for the quarter ended December were announced, the company had said while the storage media market condition continued to be positive, it had seen intermittent challenges due to high interest rates, adverse foreign exchange movement and liquidity constraints.

The company recorded unrealised mark-to-market exchange losses of Rs 40.40 crore in the third quarter of 2011-12, owing to a sharp depreciation in the rupee. However, key input costs were stable and operating cash flows would continue to be robust during the next few quarters.

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